The Washington Post - 21.03.2020

A18 eZ sU THE WASHINGTON POST.SATURDAy, MARCH 21 , 2020

the coronavirus outbreak

BY ERICA WERNER, JEFF STEIN AND PAUL KANE

The Senate worked to reach
agreement late Friday on a tril-
lion-dollar stimulus bill t o save the
economy from collapsing under
the ravages of the c oronavirus, but
bipartisan agreement proved elu-
sive as lawmakers debated how
best to allocate enormous sums of
money to help individual Ameri-
cans and businesses large and
small.
Early in the day, Majority Lead-
er Mitch McConnell (R-Ky.) said it
was i mperative t o a reach a deal by
Friday night on the legislation to
be able to pass it on Monday. By
Friday evening, though, major is-
sues remained unresolved, includ-
ing a push by Democrats to add
many tens of billions of dollars to
unemployment insurance pro-
grams to catch the tidal wave of
people bracing for l ayoffs.
A related issue — how to struc-
ture direct payments to individu-
als and how much to spend on
them — was also unresolved, as
were numerous other matters,
making it likely that talks would
stretch into S aturday.
Nonetheless, participants
sounded hopeful about the prog-
ress made on the legislation,
which w as introduced only Thurs-
day. The process, McConnell has
remarked, amounts to “warp
speed” f or the S enate.
“I’m not optimistic, but I’m not
pessimistic at this point. Conver-
sation is positive on a lot of good
fronts,” said Sen. Richard J.
Durbin (Ill.), the No. 2 Senate
Democrat. “There’s still some
things that need to be worked out
that could be dealbreakers, so it
isn’t o ver.”
Leaving a meeting of key Re-
publicans, White House legisla-
tive affairs director Eric Ueland
acknowledged that some sticking
points are likely to require negoti-
ating throughout the weekend,
but he said Senate lawyers would
formally draft agreed-on portions
of the b ill late Friday and through-
out t he weekend so t hat whenever
the final pieces come together, a
vote can be h eld q uickly.
“I don’t want to be negative
about where we are, because,
again, we made a significant
amount of progress, but the clock
is ticking, a nd the n eed f or legisla-
tion in order to deliver urgently
needed aid to the A merican people
and t he American economy l eaves
us no time to hesitate or pause,”
Ueland told r eporters. T he legisla-
tion’s final price appeared sure to
far e clipse $1 trillion.
As talks intensified, lawmakers
and President Trump’s team kept

pushing to make the package bigger and more aggressive. They were also working to scrap limits in the initial GOP bill that would have directed smaller cash payments to lower-income Ameri- cans than to others, amid blow- back from the White House, Dem- ocrats and R epublicans. As initially written, the plan would have given many Ameri- cans $1,200 in a one-time payment, but the poorest families — those without federal tax liability — w ould get as little as $600. That structure has drawn bipartisan criticism, and senators appeared all but certain to change it to ensure that poorer Americans do n ot receive less money. And Trump said the initial payment amount was l ikely t o be substantially higher than $ 1,000. “We’re not talking a bout a thou- sand-dollar check. We’re talking about much more than that,” Trump said Friday. “We’re also talking about doing phases. If this doesn’t work, we’re going to keep doing until w e get it going.” Trump also voiced support for barring any corporations that receive aid from being able to do stock buybacks, or use money to repurchase their stock to drive their equity prices higher, thus enriching shareholders. That issue is not addressed in the bill as initially written, but Trump said

he discussed it with Senate M inor- ity Leader Charles E. Schumer (D-N.Y.). “We talked about, as an exam- ple, buybacks, stock buybacks. I don’t want to have stock buybacks,” Trump said. “I want that money to be used for the workers and also for the company to keep the company going, but not for buybacks.” McConnell and Treasury Secre- tary Steven Mnuchin hope to see the legislation pass the Senate on Monday, but it remained unclear whether the negotiators could meet the deadline for such a massive bill, which c ould be the l argest economic rescue i n history. The frantic negotiations are taking place as the e conomic p rob- lems in the United States are mul- tiplying. JPMorgan Chase has e sti- mated that t he U.S. economy c ould shrink by 14 percent between April and June, the biggest con- traction in the post-World War II era. Goldman Sachs has estimated that 2.25 million people filed for unemployment this week, a nearly tenfold increase from one week ago and the largest number ever recorded. Underscoring the urgency of the situation as the administration searches for every possible tool to respond, Mnuchin an- nounced Friday that the nation’s tax filing deadline would be de-

layed f rom April 15 to July 15. Democrats, whose votes will be needed to pass the stimulus legislation in the House and Senate, panned the bill as unveiled by McConnell on Thursday as overly weighted toward industry. But Schumer and H ouse Speaker Nan- cy Pelosi (D-Calif.) were engaged in talks t hroughout the day Friday, although Pelosi is at home in Cali- fornia with the House out of ses- sion. House members would have to be called b ack t o vote on t he bill, a complication unto itself, given the spread of the virus and with two House members already an- nouncing they’ve tested positive for i t. Schumer and Democrats were pushing f or expanding unemployment benefits to provide six w eeks of pay with 100 percent wage sub- stitution and waive existing d elays in securing payments, among changes proposed to make the program more generous. A different coronavirus relief bill signed into law this week a lready boosted unemployment insurance pro- grams, but Democrats insist they must be further expanded as lay- offs cascade throughout the economy, r ather than just provide indi- viduals with a one-off check as envisioned in the original Senate GOP b ill. Some Republicans w ere voicing concerns about the a bility o f states

to administer large-scale increas- es in the u nemployment program, and Labor Secretary Eugene Sca- lia joined the negotiations Friday to issue a warning on that front. Economists expect a staggering increase in unemployment claims in coming weeks that could poten- tially shatter records. “That is our bottom line. It is our single most important issue,” Sen. Ron Wyden (D-Ore.) told reporters about expanding unemployment. “The administration has raised questions, as y ou k now, about how it would be adminis- tered. We h ave said, well, we think in m ost states it can be handled.” Democrats were also pushing for a large state stabilization fund to answer the pleas of governors. Schumer said that that issue, too, remained a sticking p oint. “That’s another big i ssue. That’s a big issue that hasn’t been re- solved,” Schumer told reporters late Friday, adding: “ There a re still many issues outstanding.” Despite their disagreements on policy details, lawmakers in both parties a greed that time was o f the essence in the face of the unprece- dented economic threat posed by the coronavirus, which has now put much of the nation in lock- down. “We need to deliver relief now,” McConnell said on the Senate floor. “We need to go big. We need

to minimize new complexity. And we need to move swiftly.” As originally proposed, the bill contains an extensive list of pro- posals aimed at alleviating the economic shock facing small and large b usinesses, including: delay- ing corporate taxes; providing ze- ro-interest loans; and paring back the p aid family leave plan recently approved by Congress. The plan includes numerous delays on corporate and business taxes, and would allow the hospi- tality industry immediately to write off the costs of building im- provements, changing a provision in the 2017 tax law. These changes are o pposed b y many Democrats. Beyond the general corporate tax changes, the Senate GOP bill also proposes relief for bigger firms and corporations, a move that some critics have alleged could amount to taxpayer-funded bailouts. The bill would not provide direct cash subsidies to these large firms. But it does call for other forms of emergency federal help, such as low-interest loans. The airlines would receive $ billion of “loans and loan guarantees,” while cargo air carriers would receive $ 8 billion. The legislation a lso calls for c re- ating an additional fund, of $ billion, to help r escue other i ndus- tries hurt by the coronavirus downturn. It gives the Treasury Department wide authority in de- termining which b usinesses quali- fy for the fund, which would give the Trump administration significant discretion over a large pool of money — and Senate Republicans are expected to increase the amount beyond $150 billion before the final text is introduced, according to three congressional aides and lobbyists aware of the internal discussions. The bill’s enormous interven- tions for small firms appeared to be the portion of the legislation with the most bipartisan agreement. Spearheaded by Sen. Marco Rubio (R-Fla.), the proposal calls for $300 billion of loans to be made available through lenders certified by the Small Business Administration, with the maximum loan capped at $10 million. Unlike the part of the bill for large companies, small businesses could be eligible to have their loans forgiven at a future date if they retain their employees during t his period a t the s ame l evel a s before the coronavirus h it. Rubio told reporters that lawmakers are also looking at loosen- ing the SBA definition of small business — currently an enter- prise with a maximum of 500 employees — to ensure that some- what larger businesses d o not m iss out o n relief. [email protected] [email protected] [email protected]

seung Min Kim contributed to this report.

Senate dives into talks on trillion-dollar stimulus as economic crisis grows

MAry F. CAlVert/reUters Senate Majority Leader Mitch McConnell, left, Treasury Secretary Steven Mnuchin and Minority Leader Charles E. Schumer on Friday.

Hopes high for passage next week of bill initially attacked as inequitable

BY AARON GREGG, DAN LAMOTHE AND CHRISTIAN DAVENPORT

President Trump has promised
to invoke a wartime production
law first used to churn out bullets,
tanks and other weaponry during
the Korean War but former De-
fense Department officials from
Republican and Democratic ad-
ministrations say it could take
more than a year to bear fruit.
A growing chorus of politicians
in recent days have expressed
hope that American industry will
rally for a different kind of war,
churning out ventilators, protec-
tive gear and basic medical sup-
plies that are in desperately short
supply as medical providers
across the country battle the
deadly virus classified as a pan-
demic.
But analysts and former de-
fense officials say the efforts so far
could have little effect on a medi-
cal device industry that is already
producing in overdrive mode.
Even the most aggressive tools at
the administration’s disposal —
nudging carmakers or aerospace
factories to start making ventila-
tors — could take more than a
year to achieve results, the former
Defense Department officials
told The Washington Post.
An executive order on Wednes-
day gave companies legal cover to
prioritize production of ventila-
tors and protective gear, but ana-
lysts say device manufacturers
are already doing that. The

Trump administration has so far balked at implementing a sepa- rate provision that could entice nonmedical manufacturers such as car companies to get involved. In a tweet on Wednesday, Trump said he would only do so in a worst-case scenario, adding: “Hopefully there will be no need, but we are all in this TOGETH- ER!” Then, on Friday, Trump told Senate Minority Leader Charles E. Schumer (D-N.Y.) in a phone call that he would trigger the act after Schumer urged him to “get ventilators and other important medical equipment to those who need it,” a Schumer spokesperson told Politico. It remains unclear which provisions of the act the White House plans to use. Fully activating the Defense Production Act could allow the administration to use public funds to give manufacturers a boost through grants, contracts or loan guarantees. That could include luring nonmedical manufacturers to get into the business of producing ventilators, some- thing the British government is reportedly pursuing. Elon Musk suggested on Twit- ter that one of his companies would make ventilators if there were a shortage, prompting a wave of responses that can best be characterized as, “Well, there is a shortage, so make them.” The government could even commandeer civilian airplanes to transport supplies or workers or deploy the Defense Department’s logistics network. But experts worry that building new production centers or retrofitting manufacturing plants would take too long, even with a massive outlay of public funds.

Bill Greenwalt, who oversaw the Pentagon’s procurement and industrial planning in the Bush administration, said the efforts Trump took this week “should have occurred months ago.” Greenwalt said investing in machinery and other government equipment to expand the ventilator production industry “at best would take a year or longer to do.” Getting an automaker to produce ventilators would probably take 18 months, he said. Even then, the necessary raw materials might not be available as other coun- tries scramble to address their own shortfalls. “I think we will find out that our industrial base is not capable of producing what we need, as I expect much of it has been out- sourced to China and elsewhere,” Greenwalt said. Eric Fanning, who heads the Aerospace Industries Associa- tion, said the ability of a nonmed-

ical company to start producing ventilators would be easier for some industries than others. Wes Hallman, a retired Air Force colonel who is senior vice president for policy at t he Nation- al Defense Industrial Association, said such a turnaround would take “a matter of months,” in the most optimistic scenario, to start producing the needed health- care products. Companies that already make ventilators appear to be moving as fast as they can, raising questions about whether federal fi- nancing would significantly change the equation. Union officials at a General Electric plant in Madison, Wis., say they are pursuing a “light- ning-fast attempt” to build as many ventilators as possible over the next 90 days. The factory is moving from one and a half to three shifts as the company seeks to increase its output, said Alex

Hoekstra, an official with the International Association of Ma- chinists and Aerospace Workers. “There’s no company I can think of in the industrial base that isn’t p ulling out all the stops,” said Brett Lambert, who man- aged the Obama administration’s Defense Production Act policy. One scenario would have existing manufacturers keep producing their own FDA-approved ventilator models, Hunter said, and have the government or other companies provide them with needed equipment or manpower. The act should be used “like a scalpel, not a bazooka,” Hunter said. Some envision a stronger role for government in guaranteeing purchases ahead of time. Frank Kendall, who served as undersecretary of defense for ac- quisition, technology and logistics in the Obama administration, said that the Defense Production Act “is a tool they should definite- ly use” in the Trump administration and that it could help in major ways if used effectively. One option, he said, is for the government to buy manufacturing equipment needed by companies already making ventilators to boost production. Another is to provide tooling for companies that can convert to making needed products. The law gives the government certain authorities, which Trump has not activated, to install equipment in private factories. “What you also want to do is give companies the certainty that they are going to get paid for whatever they do, and you do that through ordering directly,” said Kendall, now a senior fellow at the Center for American Progress. The Defense Logistics Agency is

best suited to handle the mission, he said. Trump has previously said the government should not play that role. In a Thursday news confer- ence, the president pushed back on the idea that the federal government should be responsible for shipping products to where they are needed. He said the responsibility should fall to state governors. State officials, meanwhile, say they need federal guidance. New York Gov. Andrew M. Cuomo, a Democrat, said that his state is already “shopping for ventilators” in China and elsewhere but that the federal government “can actually play a very constructive role” using the Defense Produc- tion Act. Michigan Gov. Gretchen Whit- mer, also a Democrat, said “swift and clear guidance” would help the situation, and Sen. Gary Pe- ters (D-Mich.) said on MSNBC’s “Morning Joe” on Friday that his state is ready to start turning shuttered car factories into manufacturing centers for masks and other needed items but that he needed the president to fully trigger the Defense Production Act. David Berteau, president of the Professional Services Council, a trade association for government contractors, said the government can be doing more to leverage the “surge capacity” it already has. “Industry is up to doing way more than the government has called on them to do. Industry has surge capacity that needs to be tapped.” That includes production and “providing personnel for tasks that government workers are not available to do.” [email protected] [email protected] [email protected]

Having automakers churn out ventilators won’t be quick or easy, experts say

Former Pentagon officials say efforts could take more than a year

lIndsey WAssOn/reUters An employee at Ventec Life Systems, a ventilator manufacturer, works on final assembly of one of the machines this week.

The Washington Post - 21.03.2020

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